Sunday, September 15, 2019

New Housing Grants 2019 - Up to $160,000 Grants At All Locations

HDB just announced a few days ago they will introduce the new Enhanced CPF Housing Grant (EHG) which will replace the additional housing grant (AHG) and special housing grant (SHG). The income ceiling has also increased from $12,000 to $14,000 for new and resale HDB purchases and $14,000 to $16,000 for EC purchases. Many more people will benefit in this latest roll out. Let me illustrate a few key points which will be more applicable to most of us.

More Grants for purchase of HDB flats in Mature Estates

Under the previous AHG and SHG scheme, only couples who has combined income of $5000 or less will get AHG. SHG is not applicable for flats in mature estates where couples with combined income of up to $8500 could get some grants.

Good news for those who are looking to get a BTO or resale flat in mature estates now. The EHG now gives out grants for combined income up to $9000 for first timer families and up to $4500 income for singles.

Check out the grants below:

Average Monthly Household Income* Over 12 MonthsEHG Amount
Not more than $1,500$80,000
$1,501 to $2,000$75,000
$2,001 to $2,500$70,000
$2,501 to $3,000$65,000
$3,001 to $3,500$60,000
$3,501 to $4,000$55,000
$4,001 to $4,500$50,000
$4,501 to $5,000$45,000
$5,001 to $5,500$40,000
$5,501 to $6,000$35,000
$6,001 to $6,500$30,000
$6,501 to $7,000$25,000
$7,001 to $7,500$20,000
$7,501 to $8,000$15,000
$8,001 to $8,500$10,000
$8,501 to $9,000$5,000
Source: HDB

The above grants apply to all flat types and at all locations regardless if its non mature or mature estates. As we can see, most couples who have combined income below $8000 will get at least $15,000 in grants even when they buy a 5 room flat or a flat in a mature estate. Previously, they get nothing under these conditions. 

One Condition - Flats must have lease remaining to cover until age 95

While the type of flats and locations are no longer factors which affect whether we get the grants, the only caveat is that we must buy flats that we can call home until age 95. This affects the subsidies for those who are considering buying resale flats. 

In simple terms, if you're 30 years old and buy a resale flat that has less than 65 years lease, you will not get the full grants under EHG. You will still be able to get the grants but it will be prorated based on the extent that the flat’s remaining lease can cover you until age 95. It means you will still get some grants but lesser. 

Grants for low income families

The grants for families with income of less than $1500 remains high at $80,000. Previously, if they buy a HDB flat in a non mature estate, they could get $40,000 AHG and $40,000 SHG. However, if they decide to stay near their parents who may be in a mature estate, they could only get $40,000 AHG but $0 SHG. Their total grants is only $40,000. 

Under the new EHG, if they buy a flat in a mature estate, they will still get $80,000 EHG as long as the remaining lease of the flat covers them until age 95. 

Grants for middle income families

Middle income families were known to be the most disadvantaged in terms of grants as they are not very poor but not very rich also. Under the previous scheme, a couple with combined income of $4900 and buys a flat in a mature estate will get only $5000 under AHG. They will not qualify for SHG. 

Under the new EHG, the same couple who buys a flat in a mature estate will get additional $40,000 in subsidies. In total, they will get $45,000 in grants under EHG as long as the remaining lease of the flat covers them until age 95. 

Up to $160,000 grant for resale HDB flats - For first timer

Those first timer who are buying resale HDB flats in non mature and mature estates will be really happy to hear that they can get up to $160,000 grants. For the maximum grant, you need to fulfill the following criteria:
  1. Buying 2- to 4-room Resale Flat ($50,000 family grant)
  2. To live with parents/ child ($30,000 proximity housing grant)
  3. Have income of not more than $1500 ($80,000 EHG)
$50,000 + $30,000 + $80,000 = $160,000

While most of us may not meet the criteria above to get the full $160,000 grant for resale flats purchase, we might meet the below criteria to get $100,000 grant:
  1. Buying 2- to 4-room Resale Flat ($50,000 family grant)
  2. To live within 4km of parents/child ($20,000 proximity housing grant)
  3. Have income of $6,001 to $6,500 ($30,000 EHG)
$50,000 + $20,000 + $30,000 = $100,000 grants. 

This $100K grant is still quite substantial for a middle income couple looking to buy resale flats living near their parents regardless of location. However, don't forget the remaining lease of the flat must cover until age 95. Under previous scheme, they could only get $70,000 if they bought a flat living near their parents in a mature estate. 

The new housing grants scheme definitely makes it more flexible as they have totally removed the criteria for flat type and locations. Most people can definitely get more grants as compared to last time. You might want to check out the new enhanced housing grant to see if you are eligible. 

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